Russia 111005 Basic Political Developments

Sberbank, VTB Group, Rosneft: Russian Equity Market Preview

http://www.bloomberg.com/news/2011-10-04/sberbank-vtb-group-rosneft-russian-equity-market-preview.html
Q

By Anna Shiryaevskaya - Oct 4, 2011 10:00 PM GMT+0200

The following companies may be active in Russian trading. Stock symbols are in parentheses and share prices are from the previous close of trading in Moscow.

The 30-stock Micex Index lost 5.7 percent to 1,267.77. The dollar-denominated RTS Index dropped 5.2 percent to 1,224.92.

OAO Sberbank (SBER03 RX): The ruble depreciated against the dollar for a fifth day on concern Europe’s debt crisis will hurt demand for oil, Russia’s chief export earner. Shares of Russia’s biggest lender fell 8.5 percent to 62.53 rubles.

VTB Group (VTBR RX): VTB Group’s consolidation of the Bank of Moscow “will not negatively affect” the lender’s results, Deputy Chairman Herbert Moos said. VTB’s shares fell 7.2 percent to 0.06107 rubles.

OAO Rosneft (ROSN RX): Oil fell for a third day in New York amid concern that fuel demand will drop as investors lose confidence in the economies of the U.S. and Europe. Rosneft, Russia’s biggest oil producer, plunged 6 percent to 175.15 rubles.

To contact the reporter on this story: Anna Shiryaevskaya in Moscow at [e-mail]

To contact the editor responsible for this story: Will Kennedy at [e-mail]

Metalloinvest posts 1H 2011 net income of $985 million on higher production

http://rt.com/business/news/1h-2011-higher-production-085/

Published: 5 October, 2011, 11:18

Edited: 5 October, 2011, 11:18

Russian miner, Metalloinvest, has posted a 1H 2011 net income of $985 million under IFRS.

The bottom line is up 89% year on year from the $520 million net result posted for 1H 2010, with 1H EBITDA climbing 63% year on year to $1.982 billion, on the back of a 54% rise in revenues to $5.132 billion.

The company says the results reflect a 7% increase in production on 2H 2010, with a 26% increase in iron or shipments, backed by a 15-20% half on half increase in prices, offsetting higher production and shipment costs

Deputy CEO and Chief Financial Officer, Pavel Mitrofanov, was positive about the posting, while noting that the company would continue to focus on higher value added production.

“The Company demonstrated solid performance in key financial metrics in H1 2011. We have achieved strong results due to a substantial increase in iron ore production volumes, a diversification of the client base and export growth to prospective Asian markets, predominantly China, as well as the management efforts to control production costs. At the same time, the Company continues to develop its key investment projects aimed at increasing high value-added iron ore output.”

Alrosa Buys Back Gas Companies From VTB Capital, Vedomosti Says

http://www.bloomberg.com/news/2011-10-05/alrosa-buys-back-gas-companies-from-vtb-capital-vedomosti-says.html
Q

By Yuliya Fedorinova - Oct 5, 2011 6:14 AM GMT+0200

OAO Alrosa, Russia’s diamond producer, may spend $1 billion to buy back the Urengoy gas company and Geotransgas from VTB Capital, Vedomosti said today, citing unidfentified people familiar with the deal.

The diamond company sold the stakes in both gas units in 2009 for $620 million, but VTB Capital retained the right to ask Alrosa to repurchase the stakes in 2012, Vedomosti said. Alrosa decided to buy back the assets earlier as otherwise it would have to cover VTB Capital’s expenditure on development of the gas companies, the newspaper said..

To contact the reporter on this story: Yuliya Fedorinova in Moscow at [e-mail]

To contact the editor responsible for this story: John Viljoen at [e-mail]

Alrosa Policy Aims to Keep Diamond Market Stable

http://www.israelidiamond.co.il/english/News.aspx?boneID=918&objID=9965
05.10.11, 07:02 / World

Alrosa has adopted a diamond trade policy designed to maintain market stability and avoid the negative influence of “speculative factors,” Russia’s government-owned diamond producer announced after this week’s working meeting of its management.

 

The company noted that the world’s major diamond jewelry consumer markets – the US, China, and India – are showing a steady strong demand for diamonds, as evinced by the results of the Hong Kong Jewellery and Gem Fair held last month. Alrosa anticipates that 2011 will see extremely high diamond jewelry sales compared to 2009 and 2010.

 

Despite the strong demand, Alrosa foresees that global diamond purchases will dip slightly due to the traditional annual slowdown from August-October and the drop in worldwide stock indices.

 

In October, Alrosa plans to sell rough diamonds under long-term contracts after having reduced the supply of rough product available. The supply of rough diamonds for November and December will be “conditioned” by market demand, the company said.

Russian mining company boss attacks fellow businessmen as 'adolescent'

http://www.guardian.co.uk/business/2011/oct/04/polymetal-russian-boss-speaks-out?newsfeed=true
Polymetal is to list on the London Stock Exchange

Simon Goodley

guardian.co.uk, Tuesday 4 October 2011 18.33 BST
The chief executive of the latest Russian mining company heading for the FTSE 100 has attempted to distance himself from the corporate governance woes afflicting his compatriots by slamming businessmen from the former Soviet Union as "showy" and "adolescent".

Vitaly Nesis, the head of precious metals group Polymetal, added that many of his country's industrialists think it a "requirement to circumvent or massage around [corporate governance standards]" and that they need to either "rationalise or take a leap of faith".

"The Russian business culture is still an adolescent culture," he said. "It has not learned patience or humility. It is still showy and wide-mouthed. This is just youth."

The comments come after Polymetal announced last week that it is to list on the London Stock Exchange and hopes to raise $500m (£319.9m) in new money.

The remarks also follow a string of negative stories about the corporate governance standards of companies from the former Soviet Union, an issue which has caught the attention of David Cameron who has commented: "When these companies come to London, they've got to understand we do have rules of corporate governance that need to be obeyed."

The prime minister's intervention followed the debacle at the top of Kazakh copper miner Eurasian Natural Resources Corporation, which was described as "more Soviet than City" by departing director Ken Olisa earlier this year after major shareholders clashed with the board. Furthermore, two of Russia's most famous oligarchs – Roman Abramovich and Boris Berezovsky – are currently playing out their long-running feud in a London court.

Nesis added: "The perception of the Russian oligarch is negative in London. Such news only adds to the struggle."

Polymetal, Russia's fourth-largest gold producer and the country's biggest silver producer, has a market capitalisation of around 200bn roubles (£3.9bn) on the Russian stock market, a valuation that should put it in the third quartile of the FTSE 100 by early December. Entry to the benchmark index would force UK funds seeking to replicate FTSE 100 performance to buy the miner's shares, which is likely to add to recent criticism of the index for being too heavily exposed to foreign natural resources companies.

The group says it is switching its shares to London to give it access to capital for future projects while the listing will also create a more acceptable currency for global acquisitions. Around 15% of the group's shares are also traded via Global Depository Receipts (a financial instrument used to own foreign companies) meaning the Russian limit of 25% would be breached if any of the three major investors wanted to sell. Polymetal's leading shareholders are Czech billionaire Petr Kellner's investment group PPF which owns around 20%; Nesis's brother Alexander who holds around 18%; and billionaire Waterstone's owner Alexander Mamut with around 10%. The trio are locked-in for 180 days.

Nesis said he receives no intereference from any of the main shareholders and is confident they will cause a London-listed company no embarrassment. "I know for sure that my brother never dealt with the devil. What I know of Mr Mamut and Mr Kellner, they haven't either."

Polymetal was Russia's fourth-largest gold producer and the country's biggest silver producer last year. After enjoying a stellar run on the back of its status as a safe haven, the value of gold has dropped slightly recently. Nesis said that if "there were a dramatic fall [in the gold price over the next few weeks] we will have to cancel the offer", although he insisted that the company's existing shares would still be listed in London.